AirMedia's Mile-High IPO

Red China? How about Green China? The so-called communist country is undergoing an IPO craze, amid blowout offerings from, Giant Interactive (NYSE: GA  ) , and China Digital TV (NYSE: STV  ) . Now it's AirMedia Group's (Nasdaq: AMCN  ) turn. Following its debut yesterday, the stock surged past its initial $15 share price.

AirMedia operates an extensive media network, with more than 2,000 digital TV screens in airports and more than 16,000 digital screens in airplanes. Its content is a mixture of news, weather, sports, and of course, advertising, from 240 sponsors including China Mobile (NYSE: CHL  ) , China Unicom (NYSE: CHU  ) , and Nokia (NYSE: NOK  ) .

While still a fairly small operation, AirMedia is posting sizzling growth rates. For the first half of this year, revenue doubled to $15.9 million, while net income came to $4 million.

Despite competitors such as JC Decaux, AirMedia remains the dominant player in its market. The company operates 95% of the digital TV screens in 15 of China's largest airports.

The macro trends also look promising. ZenithOptimedia projects that China's advertising market will grow 18.1% per year from 2005 to 2009 (to a total of $20.6 billion). What's more, the number of China's air travelers has been growing 15.5% per year, according to the China Statistical Abstract 2007. And since AirMedia has one of the few national ad networks in China, the upcoming 2008 Olympics should be a nice boost.

Unfortunately, investors have inflated AirMedia's valuation to roughly $2.4 billion. Even if the company doubles business for 2007, that's still a frothy 64 times revenue. In other words, this is really a stock for those who can take a flier on an early-stage company in a strong growth market -- which usually requires investors with a tough stomach for turbulence. Thus far today, the shares are already down 9%.

We've screened further Foolishness:

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 539981, ~/Articles/ArticleHandler.aspx, 10/22/2016 5:41:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 20 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
CHL $58.94 Down -0.28 -0.47%
China Mobile CAPS Rating: ****
CHU $12.04 Down -0.10 -0.82%
China Unicom CAPS Rating: **
NOK $4.92 Down -0.08 -1.60%
Nokia CAPS Rating: **